Signaling theory of education and competence

The signaling theory of education claims that the value of education to an individual is mostly or almost entirely exhausted by what her education signals to employers and others about her. For example, the signaling theory would say that your having attended college increased your expected future earnings not because you learned valuable skills in college that increased your job productivity, but rather because your ability to complete a degree showed potential employers that you were smart, diligent, sufficiently socialized, etc., which made them want to hire you more. Bryan Caplan has written a lot about this theory over at EconLog and elsewhere, and he has a forthcoming book on the topic that I look forward to reading. (I highly recommend both of his previous books, The Myth of the Rational Voter and Selfish Reasons to Have More Kids.)

This theory appears to enjoy less acceptance than its competitors, at least in academia. However, even though I certainly haven’t read the academic literature on the subject, my personal experience makes the signaling theory very attractive to me. Even though I’m in a technical field and have a STEM degree, I use only a tiny fraction of the skills I acquired through my many years of schooling at my job. And most of the ones I do use, I had already forgotten by the time I entered the workforce, requiring me to relearn them. I think a lot of people have made similar observations. Beyond that, my experience learning Japanese as an adult has given me another reason to favor the signaling theory. While hardly profound, this observation seems underappreciated.

Learning a language as an adult is hard for a number of reasons. There are undoubtedly biological barriers (in the form of structural changes to the brain) that arise as one gets older, but there are a lot of practical ones as well, and I think it’s probably really hard to tease out what portion of the difficulty can be attributed to each factor. Regardless, I think one of the bigger practical barriers is that an adult’s motivation dies well before his skill level rises to perhaps what is commonly called “conversational”, where one is good enough to interact with native speakers on some kind of non-trivial level. You may not be fluent, and you may not be able to talk about philosophy or the latest newspaper article, but you can genuinely communicate with a native speaker about some topics without responding in a scripted manner. At this point, at lot of people do away with more directed studying techniques like vocab reading and “practice” the language by doing it. (This might lead to one stagnating at this level, but that’s a topic for a different post.)

The point I want to highlight is that until you reach this level, the value of all your studies is essentially zero. You can spend a lot of hours studying a language before you’re worth much more than a person who hasn’t studied it at all and communicates with gestures. It’s really demoralizing when, after working through those textbooks and listening to those CDs, you watch a movie or visit the country in question and are completely and utterly lost. This makes a lot of people think it’s hopeless and give up.

What does this have to do with the signaling theory of education? The connection rests on this fact: language learning is not at all unique in this regard. Almost every other endeavor, cognitive or athletic, has this extremely jumpy investment-reward curve. Spending 50 hours practicing ping-pong can make you a lot better than a person who has never touched a paddle when measured by how skilled you look, but if you measure by, say, your percentile rank or your value on the international ping-pong circuit, you two are still virtually identical. And when it comes to the kind of subjects one studies in school and their value to future employment, the relevant metrics look a lot more like these latter two measures.

All those hours you studied history in school (unless you perhaps majored in history) have almost certainly given you no advantage over a person who has spent precisely zero hours studying history when it comes to actually reasoning about history or its trends in any kind of remotely interesting way. Accordingly, unless you actually enjoyed them, it’s hard to see those classes as anything but a waste of your time and everyone’s money. (And very few people enjoy them. That’s why they’re called “requirements”.) Beyond basic reading and math (mostly arithmetic) skills, this is true of every subject you studied in school.

One might respond that studying history substantially improved, say, your overall reading ability. This objection hints at a number of deeper issues worth discussing, but for now I just want to point out that even if this is so, your studying history almost certainly didn’t improve your overall reading ability more than reading about any topic would have. Hence, at best, this response supports making students simply study something for a fixed amount of time. However, that’s not how 99.99% of schools work. We expend a lot of energy making kids strictly comport to a rigid-but-arbitrary curriculum.

It seems, then, that the vast majority of time you spent in school yielded almost no measurable competence in any given subject. If this is correct, it’s hard to see how signaling could account for less than a large majority of your education’s value.


4 Responses to “Signaling theory of education and competence”

  • Skipbeam Skanderhosen

    It is not much further along this road of thought that one would start considering alternatives to the standard k-12 education system. I am reminded of this post by David Friedman about his unschooling of his kids

    “…out of the enormous body of human knowledge, there is some subset that everyone should study and that is large enough to fill most of thirteen years of schooling. That assumption is clearly false.”

  • Having only discovered my interest in economics after leaving the arena of formal education with only a high school degree, I can say that the discipline has completely changed the way I think. If you replaced your history example with economics, would you make the same argument?

    • Yeah, I think so. I would wager that most people who took micro/macro 101 for a social science credit in college still think very, er, poorly. Doing it as a labor of love is a much different experience, I think.

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